People@Work: For Many Americans, a Job Means Health Care

People have lots of reasons for holding onto jobs they might otherwise leave behind for more exciting opportunities. For some, it's mere convenience: An otherwise unchallenging job may offer flexible work arrangements, allowing greater time to devote to child or elder care, civic duties or pastimes.

More often than not, though, financial concerns are what keep workers from being more mobile. Having accrued small but steady wage gains through the years, some workers worry their salaries can't be matched elsewhere. And especially these days, many others stay put to cling to employer-sponsored health plans that provide reasonably priced coverage for themselves and family members.

Despite such concerns, workers need little further impetus to stay put than the Great Recession, which has cost some 8 million Americans their jobs. Workers today have greater appreciation for workplace stability and the benefits that come with it, so showed a recent study by workplace consultancy Towers Watson (TW). The company polled more than 20,000 employees in 22 global markets. In the U.S., those surveys took place late last year.

The Long-Term Safety Net Is Long Gone

Data from Towers Watson's survey showed that 39% of workers would prefer to work for one employer for life, while a similar number, 40%, said they'd like to limit their job-hopping to two to three organizations throughout their careers. The remainder prefer to keep to their options open, providing a chance to switch employers as opportunities arise.

The irony, of course, is that many employers don't provide the same long-term safety-net that was customary in decades past. Even before the devastating economic downturn, many businesses had eliminated the traditional career-long "deal" that once existed between employees and employers.

The Towers Watson survey also showed that a striking 81% of workers said they had no intention of leaving their current jobs or weren't looking, but would consider offers that presented themselves. "The recession has made many people. . . risk averse, grateful to have a job," Max Caldwell, a leader in Towers Watson's talent and rewards business, recently told Marketwatch.com.

The staggering number of job losses has made it apparent even to those still working that they're increasingly on their own, Caldwell said. As if navigating a career weren't enough, workers are having to take an ever-larger role in managing retirement and, perhaps most important, health care coverage.

Cobra Enrollment Has Doubled

And what do employees do once they've lost a job and possibly their health insurance? For sure, last year's $862 billion economic stimulus package has allowed many to maintain coverage through a 65% subsidy for Cobra, the federal program that allows laid-off workers to keep their employer-sponsored health plan for up to 18 months. Eligible individuals can receive a subsidy for up to 15 of those 18 months.

The Internal Revenue Service hasn't yet released figures for how many have taken advantage of the subsidy, but a recent survey of 200 large U.S. employers, conducted by Hewitt, showed that Cobra enrollment has doubled to 38% from 19% since the subsidy went into effect. In their latest action, Washington lawmakers in early March expanded eligibility to workers laid off through the end of this month.

As the recession has taken its toll on full-time jobs, many workers have turned to freelancing as an alternative means of earning income. As self-employed contractors, however, freelancers must provide their own health insurance, pay their own taxes and plan for their own retirements.

An Option for Freelancers

Despite the generous Cobra subsidy, Freelancers Insurance Co., a New York City-based nonprofit insurer that provides health coverage to self-employed individuals who are members of Freelancers Union, has seen its subscriber base balloon by 60% since November 2008, says Chief Executive Officer Sarah Horowitz.

Freelancer's monthly premiums for individual policies run from about $200 a month for basic coverage to around $500 a month for more comprehensive coverage -- about half of what an individual would pay on the open market. Horowitz says the insurer expects its membership to continue rising in coming months as more Cobra enrollees are dropped from their former employers' plans -- after the 18-month extension expires.

Still, Horowitz says, even as an increasing number of workers do without employers-sponsored coverage, the real growth industry is in health care delivery -- not insurance. "A lot of companies are offering people group discounts for health care," she says. One example is a doctor's group in New York City that charges patients $79 a month for a year in return for unlimited office visits at just $10 each.

As with any new industry, however, there's a lot of uncertainty in the market. State regulators last year sought to shut down just such a system after they determined the monthly fee was equivalent to an insurance premium and required a license. Horowitz cautions that consumers should be careful before signing onto to such plans because it isn't known "what's behind that curtain."

Even if President Obama's health care insurance overhaul gets passed, it remains to be seen if the new rules will give workers more confidence to explore the job market more freely. It seems clear, though, that many would be happy to have such freedom again.